The Systemic Risk Council

The Systemic Risk Council was established in 2013 in the wake of the financial crisis. The Systemic Risk Council is an advisory body that aims to prevent and reduce systemic financial risks that may put economic development under stress. Danmarks Nationalbank participates in the Systemic Risk Council together with a number of other authorities. The chairman of Danmarks Nationalbank’s Board of Governors chairs the Council.

The Systemic Risk Council can make statements on financial issues, including developments in systemic risks and financial regulation, which the Council considers to be significant in relation to financial stability. The statements may vary in strength and may be in the form of observations, warnings and recommendations:

  • An observation implies that, in the Council’s assessment, there is a risk of systemic risks building up.

  • A warning implies that, in the Council’s assessment, there are clear signs of systemic financial risks building up and mitigation should be considered.

  • A recommendation is a specific proposal to the government or an authority to implement an initiative that could mitigate or counter identified systemic risks.

The addressee of the Council’s recommendation is required, within a period of three months, either to comply with the recommendation or to present a statement explaining why the recommendation will not be complied with.

Who participates in the Systemic Risk Council?

The Council is composed of authorities and institutions with special financial expertise and insight, ensuring representation of all relevant competencies. By law, the Council has ten members: two from Danmarks Nationalbank, two from the Danish Financial Supervisory Authority, three from the ministries related to economic affairs and three independent experts with knowledge about financial matters.

The chairman of Danmarks Nationalbank’s Board of Governors chairs the Council. Danmarks Nationalbank is secretariat for the Council. The authorities represented in the Council also participate in the secretariat’s work. The Council meets at least four times a year.

The similar macroprudential authority at European level is the European Systemic Risk Board.

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